Create a free Overdrive account to continue reading

Supreme Court sides with trucker in arbitration clause case

user-gravatar Headshot
Updated Jan 28, 2019

Prime 2018 10 05 08 00

The U.S. Supreme Court has ruled that legal disputes between carriers and independent contractors cannot be forced into arbitration even if their contractor agreements include an arbitration clause.

In an 8-0 decision issued Tuesday, the nation’s high court sided with owner-operator Dominic Oliveira over his carrier, New Prime Inc., the legal name for the Springfield, Missouri-based Prime Inc. Prime has contracts with more than 5,000 independent contractors.

The question before the Supreme Court was whether arbitration clauses within contracts between fleets and independent contractors are binding. Oliveira sought to have a lawsuit he brought against New Prime over his employment status heard in court. New Prime argued that his lawsuit was bound to arbitration, per the arbitration clause within his contract with the company.

The 1926 Federal Arbitration Act established that arbitration is mostly a binding agreement, but there are exceptions, particularly for transportation workers. Oliveira argued his situation was an exception to the 1926 law, and the Supreme Court agreed, meaning he has the ability to pursue his original lawsuit in court rather than via a third-party arbitrator.

Oliveira’s original lawsuit sought to challenge his classification as a contractor. He claimed he was a company driver and an employee of Prime, but that he was misclassified as an independent contractor. The Supreme Court did not rule on that matter. Instead, they simply ruled on whether Oliveira could pursue his challenge via the courts instead of arbitration.

However, the question before the court was even more nuanced. It wasn’t centered directly on whether disputes should be handled via arbitration or in court. Instead, the question was about who decides — courts or arbitrators — whether the ensuing procedures should be handled by courts or if they’re bound to arbitration.